Hesse's municipalities under pressure: social spending is exploding!

Hesse's municipalities under pressure: social spending is exploding!

Things are boiling in Germany! Cities and municipalities in particular are struggling with increasing challenges in social spending. A current discussion that is gaining momentum, particularly in Hesse, revolves around the reform of social benefits, with the focus on the topics of housing and citizens' benefits, child and youth welfare, and benefits for asylum seekers. According to n-tv, a survey shows that the costs of social benefits and personnel costs have risen sharply in numerous districts.

The Bergstrasse district has emphasized that the tasks of the municipalities urgently need to be adapted to the available resources of the federal and state governments. Otherwise there is a risk of being unable to act. This is further reinforced by an intense dispute between Chancellor Friedrich Merz (CDU) and Social Affairs Minister Bärbel Bas (SPD) over the high costs of the welfare state. The district council is calling for cuts in social benefits as municipalities are faced with a record deficit of 24.8 billion euros. The main reasons are the sharp increase in social spending and the doubling of personnel costs in the last ten years, as the Tagesschau reports.

Urgency for reforms

The situation is particularly threatening in the Kassel district, where transfer costs have risen from 98.3 million euros in 2015 to around 175 million euros in 2025 - an increase of 78%. And the trend shows no signs of reversing, as communities are confronted with a variety of challenges, from expanding the circle of beneficiaries to higher standards in child and youth welfare. The Werra-Meissner district also reports an increase in spending from 58.4 million euros (2020) to 94.2 million euros this year.

Personnel expenses, which have skyrocketed due to more comprehensive tasks and high collective bargaining agreements, are causing problems for municipalities. In the Vogelsberg district, for example, an estimated 70 to 80 percent of municipal expenditure goes to legally regulated tasks, which massively limits the municipalities' scope for action.

Financial situation at a glance

Although the cities and municipalities in Germany earned more last year, the record deficit could not be avoided. The contrast is striking: while income increased by five percent, expenses increased by ten percent! Although the municipalities invested an impressive 52 billion euros, the investment backlog now amounts to around 216 billion euros.

If you look back a little further, public spending and income in Germany have risen continuously since 1950. Nevertheless, in most years expenses exceeded income - a trend that has continued to solidify in recent years. The Federal Agency for Civic Education points out that the debt burden rose to a record 2,446 billion euros in 2023, while the government ratio was 48.6%.

The need is increasing, particularly in North Rhine-Westphalia. A quarter of the German cash loan volume is accounted for by just nine cities, which vividly illustrates the financial crisis situation. In these times when the demands on social infrastructure are growing, it is becoming increasingly important that the federal, state and local governments work together to find solutions to maintain the communities' ability to act. The people in the communities are facing a major challenge, and there is no denying that there is a real big concern in the air.